Overstock and Newegg win an e-commerce patent ruling

By Thad RueterSenior Editor

Alcatel-Lucent loses its appeal of a 2011 judgment.

Overstock.com Inc. and Newegg Inc. this week won another e-commerce patent battle against Alcatel-Lucent USA Inc.

The Paris-based telecommunications firm, which has offices in the United States, claimed the two online retailers infringed upon its patents for functions such as web site drop-down boxes, text boxes, site search and tools that correct consumer misspellings and other errors.

In 2011 a jury in the U.S. District Court for the Eastern District of Texas rejected those claims. Alcatel-Lucent appealed, and this week the U.S. Court of Appeals for the Federal Circuit in Washington denied the appeal. The Court of Appeals issued no formal opinion.

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Web-only mass merchant Overstock.com is No. 31 in Internet Retailer’s new Top 500 Guide. Computer and consumer electronics retailer Newegg is No. 14. Both are among the few e-retailers that have decided to fight what they consider “patent trolls” in court instead of paying licensing fees for e-commerce technology that other companies say they own. The term “patent trolls” is a derogatory way to refer to companies that buy up patents and seek to make money by enforcing them. In January, for instance, Newegg won a reversal of a $2.5 million judgment against the e-retailer in a lower court, in a case involving Chicago-based Soverain Software LLC. "We believe this [week's] decision is an indication of the strength of the merits of our case," says Newegg chief legal officer Lee Cheng.

Mark Griffin, general counsel for Overstock, has said that Alcatel-Lucent had wanted as much as $6 million for access to technology covered by three patents. “I think this is a message to patent trolls,” he said today. “We are not going to put up with spurious claims.”

A spokesman for Alcatel-Lucent would not say if the company plans to further pursue the two e-retailers in court. “We are of course disappointed by the decision,” he says.

Earlier this year, in a similar case involving Alcatel-Lucent, a U.S. district court judge dismissed one patent infringement claim filed against Barnes & Noble Inc. (No. 27 in the Top 500) , but let stand two other claims. That case is still pending.